Malaysia gaming to pick up by end-2021, in proxy for national reopening: report

MALAYSIAN gaming earnings could rebound by year-end, with revenue strength to return over the next two years - even with the tough lockdown measures now in effect.

That's as business operations should resume by early Q4 2021, on an accelerating vaccine roll-out, according to UOB Kay Hian analysts Vincent Khoo and Jack Goh.

Gaming counters are "a major direct proxy for the economic reopening investment theme, ahead of at least a partial reopening of Malaysia's borders", said the analysts, who hope that Malaysia will ease business restrictions in August and September.

They cited the recovery trajectories in Britain and the United States, to suggest that the gaming sector will be "a main beneficiary to the upcoming economic reopening".

"Valuations should continue to partially factor in earnings recovery and business normalisation in 2022," they said in their report on Wednesday.

The analysts projected that gaming stocks could resume attractive payouts of 3.9 per cent to 7.8 per cent, on revenue resilience and steady cash flow in 2022 and 2023.

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Though casinos are expected to reopen later than number forecast operators, the casino segment "offers substantial returns which extend through 2022", they added.

UOB Kay Hian maintained its "overweight" call on Malaysian gaming. It named casino operator Genting Malaysia a top pick for "its domestic-centric business model" and possible dividends, as well as the potential of the Resorts World New York City project.